Despite recent discouraging signs, the Canadian economy is likely to grow faster later this year, according to an RBC economist.
Interviewed by BNN Bloomberg, RBC deputy chief economist Dawn Desjardins noted that in spite of recent declines in economic growth, there are positive signs that some momentum will return in the second half of 2019.
The negatives include a decline in the rate of economic growth for three of the last four months in 2018, weaker than expected consumption activity – perhaps due to increased interest rates – and a significant decline of production in the oil patch in the fourth quarter, as producers pulled back in anticipation of legislated production cuts imposed in January. The Canada Post strike also hurt economic activity, Desjardins noted.
But that strike was among a number of unique factors that depressed growth at the end of 2018. With those special factors removed – including the end of the legislated oil production cuts – growth may actually increase into the second half of 2019.
“We’re all anticipating we’ll see a buildup in momentum,” Desjardins said. While businesses have reported that they have hit or approached their capacity limits, “if they see signs that the economy is in fact riding through this rough patch, we’ll see a pickup in investment activity, and that will drive the economy as we go through the second half of this year.”
Desjardins noted a recent StatsCan survey indicating companies plan to begin making new investments – at a slower pace than in 2018, but still positive. Much of that investment will come in manufacturing, she said.